Jim Cramer Warns AI Stock Decline May Continue Despite Profitable Fundamentals
The Mad Money host predicts further losses for semiconductor firms and warns that leveraged neocloud developers face the highest risk of debt default.
By Matthew Collins ·
Jim Cramer predicts the recent drop in artificial intelligence stocks will continue.
The sell-off accelerated over the last two trading sessions following the midterm elections. Micron shares fell 17% on Thursday after a sharp decline the previous day. GE Vernova lost 7% on Thursday, while Sandisk plunged 22%. These companies support the AI data center buildout. Growing opposition to new data centers has raised doubts about future infrastructure spending.
Cramer stated that the market has not yet found a bottom. He noted that many tech stocks, particularly semiconductors, lack support after running too high. He rejected comparisons to the 2000 dot-com crash, arguing that current AI firms are profitable rather than speculative. He described the current decline as orderly because these companies generate revenue. Investors pushed prices up by assuming data center construction would continue at its current pace indefinitely.
The host identified smaller developers as the primary risk. He named CoreWeave, Iren, and Nebius as companies facing particular danger. These firms borrowed money to finance projects that may now face regulatory delays. Cramer said this debt load could hurt the stock market. He added that no major player is currently defaulting on their debt. He stated that the neocloud debt issue is not enough to sink the entire market.
Cramer suggested a swift sell-off is better than a prolonged downturn. He said he prefers the market to remove the excesses quickly rather than slowly. He advised investors to keep sufficient cash on hand. Falling interest rates and signs of easing inflation provide reasons for optimism. The possibility of an end to the Iran war also offers a positive outlook.
The CNBC host concluded that holding cash prevents panic and complacency. He stated that clear-headedness helps investors lose less money until conditions improve.
He ended his analysis by noting that market conditions always eventually get better.
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